France FIRE Advice

[MagicMarker123]

Hi all, planning on a FIRE retirement in France within the next 1-2 years. Hoping to get some feedback on portfolio and planned withdrawals. It's going to be hard to mentally shift from accumulation phase to distribution phase.

All amounts in USD for ease of comparison.

Country of residence: USA, but planning on moving to SE France in 1-2 years for FIRE
Age: 38; spouse 39. 2 young kids
Mortgage Status: Rent
Current Portfolio:

• Taxable: $2.2 M

• Trad IRA/401k: $1.4 M

• Roth IRA: $300 K

• HSA, cash in checking accts: $50 K

Allocation is a tactical 100% 7-10 treasury bonds in all IRA accounts and taxable is 20% SPY and the rest in defensive high dividend sectors such as utilities, energy with a splash of international ETFs. Reason is that I am concerned about high US equity valuations vs historical, vs international, and vs current interest rates.

We have no pension but do have Social Security which is estimated to be $2000 per month total in retirement. It's a bit low due to our low # of work years.

Planned Drawdown:
First there will be a large initial drawdown of $900k-$1.3M to buy property and to get set up with furniture, etc.
I then use an assumption that our spending in France will be $8000 per month, which will include:

• $1500 groceries

• $500 utilities

• $250 property tax/condo fees

• $60 monthly transit pass

• $2000 private schools for kids

• $1000 French language lessons for us (probably can drop off after first year after we become competent enough)

• $800 eating out

• Rest for travel/entertainment/misc which will hopefully include regional/local trips every school break and a trip back to the US to see family every summer

Distribution plan is designed to be tax efficient. Plan to convert $90000 per year from Trad to Roth via Roth ladder and draw $36000 in dividends/stock sales from taxable account. The problem is that after the house I am left with $2.65 M estimated for spending, and the 4% rule of thumb is that will yield $106,000 per year of spending money, which after tax ($95,400) is dangerously close to the $8000 per month spending, leaving me no buffer.

Main Concerns/Questions:

• Is it more of a mental thing to have limited buffer during FIRE drawdown period? I am so used to saving 30-60% of my post-tax income that I worry I'll be overwhelmed with anxiety being paycheck to paycheck each month with no buffer.

• Is it worth cutting out private school for kids and just sending them to a public school? Plus side is it will shave off a big portion of expenses. Downside is concerns about hooligans in public schools and the lack of a strong bilingual curriculum that the private school offers.

• If absolutely needed, I could supplement the income by doing consulting work for US clients, but I kind of don't want to do that in FIRE and also do not want to incur the added complexity of French self employment tax filing.

• I could use a higher initial portfolio drawdown percentage but with us being so young and active with hobbies to explore and free time to do it in, we risk running out of money.

• Right now my portfolio is largely unhedged for currency differences. I'm thinking about after the move gradually shifting over more of the IRA allocation into a world ex-US ETF.

[langelgjm]

Wow, you sound a lot like us. We move to France next week for la préretraite or at least on extended congé sabbatique if you prefer.

Allocation is a tactical 100% 7-10 treasury bonds in all IRA accounts and taxable is 20% SPY and the rest in defensive high dividend sectors such as utilities, energy with a splash of international ETFs.

If I understand your total asset allocation is 56.5% stocks and 43.5% bonds? That seems too conservative for a very early retiree. Very early retirees need to balance SORR with the risk of inflation over long (50 or 60 year) retirements, so generally need at least 70% stocks. Personally have been 80/20 for the past several years and have recently moved to 75/25 to mitigate SORR.

First there will be a large initial drawdown of $900k-$1.3M to buy property and to get set up with furniture, etc.

You may not want to immediately buy a house. We are landing in an AirBNB for a few months to scope out the rental/purchase market. SE France will be relatively expensive but $900k to $1.3 million is a lot of house. You could easily find something more modest and keep more funds invested.

Is it more of a mental thing to have limited buffer during FIRE drawdown period? I am so used to saving 30-60% of my post-tax income that I worry I'll be overwhelmed with anxiety being paycheck to paycheck each month with no buffer.

Your buffer is your millions invested, so you're not living paycheck to paycheck. That said for us it will be an adjustment to really try to stick to a budget. We never really needed to budget before mostly because our spending habits are naturally low.

Is it worth cutting out private school for kids and just sending them to a public school? Plus side is it will shave off a big portion of expenses. Downside is concerns about hooligans in public schools and the lack of a strong bilingual curriculum that the private school offers.

We will be sending our school-age child to a private Catholic school "sous contrat" (state-subsidized). The tuition is EUR 50 (not a typo, that's fifty) a month. The curriculum is essentially identical to the public school curriculum, except with an hour or two extra each week for optional religious instruction. The teachers are trained and certified in the same way as the public system. By contrast "hors contrat" private schools are substantially more expensive and do not have to follow the national curriculum at all.

Although the school is private, students can participate in many activities sponsored by the local municipality such as sailing and school trips for skiing and hiking. However our région (Bretagne) historically has plentiful options for sous contrat private schooling which is not always true elsewhere.

I would suggest visiting schools and meeting with les chefs d'établissement before making a decision. I took a scouting a trip to the region and met with 6 different school heads in 3 towns (all private, sous-contrat Catholic schools). They were all happy to meet and speak with me and show me the institutions. (Though this will be difficult if you don't speak French). Ultimately while I think any of them would have been fine, we chose one that begins English instruction from cours primaire ("CP", equivalent of US kindergarten/first grade) and also offers German from an early age. It is not a bilingual school, the mode of instruction is French.

I would also suggest to think about the different experience you and your children will have attending a French school vs a private bilingual or international school. I have been living in India the past two years, and know many families that send their children to the American International School. While the facilities (and tuition) are second to none, they do not get to meet as many local families and are generally not as integrated into the local community. By contrast our child has attended a local private pre-school where he and we have met local families, and visited their homes, participated in more local activities, etc. You are your kids are more likely to meet, interact with, and become friends with typical French if you choose either a public or sous contrat private French school, and this can be key to your successful long term integration.

If absolutely needed, I could supplement the income by doing consulting work for US clients, but I kind of don't want to do that in FIRE and also do not want to incur the added complexity of French self employment tax filing.

My limited research suggests if you would be doing fully remote work for clients based in the US, payment is received to US accounts, and there is no nexus in France, it seems it really is a gray area whether this counts as self-employment in France.

If you have questions about the visa process, getting private health insurance, importing household goods duty-free through French customs, etc. feel free to PM me.

Also check out these threads on FIRE in France:

• Are capital gains tax exempt in France for a US Citizen? (Bogleheads)

• The Case for France as a Low-Tax FIRE destination (Reddit)

[Bashido]

Your budget appears quite rough and incomplete. Health costs? Clothes? Maintenance?

Certainly go for public school. Hooligan concerns in French public school? Unless you are in the difficult areas (and w 1M+ house buying plan not likely), this is not a concern. French schools are generally more strict, disciplined and orderly than US - and many other - school systems. Also if this is a permanent move and kids are young, they need to learn French in school, otherwise they - and you - will stay isolated

Rent first. Rent prices in France are low compared to house prices, issue is limited selection. But start in long term AirBnB etc, then get rental unit. Know the transaction costs in France for buying property is 8% (frais notaire, essentially tax). So expensive if you dont adjust/like the house.

Remember taxes. There is a capital gains tax in France that you will be subjected to. Normally is is a flat 30pct tax (!), but you can opt for a progressive tax scheme. There is an example here how a 90k EUR capital gain means 10k taxes for your family size https://www.service-public.fr/particuli ... 19?lang=en

Have you taken an extended stay in France before? Why this area? Are kids/spouse as excited? We have changed countries several times, incl France. Amazing adventure but also tough proceds

[langelgjm]

Remember taxes. There is a capital gains tax in France that you will be subjected to. Normally is is a flat 30pct tax (!), but you can opt for a progressive tax scheme. There is an example here how a 90k EUR capital gain means 10k taxes for your family size https://www.service-public.fr/particuli ... 19?lang=en

OP, refer to the two links I provided in my first comment. If you are an American citizen, you will benefit from the US-France tax treaty which is among the most favorable tax treaties for Americans in the world. One of the benefits is that France gives you a full credit for any capital gains taxes you would normally owe to France (this is a simplification but that is the gist). So you will not actually owe the normal French capital gains taxes.

There is a lot of confusion on this matter and a lot of info online doesn't specifically address the benefits of the US-France tax treaty, so when you are researching be sure the source considers the treaty. Here's one discussion of the benefits of the treaty. In contrast the PwC tax summary for France does not discuss the US-France tax treaty and so much of the information there is not relevant or accurate for American citizens.

You will still owe some taxes or other charges like the cotisation subsidiaire maladie (CSM) after you join the public health system.

[cfo]

Welcome to the forum.

• Is it more of a mental thing to have limited buffer during FIRE drawdown period? I am so used to saving 30-60% of my post-tax income that I worry I'll be overwhelmed with anxiety being paycheck to paycheck each month with no buffer.

How do you think this mental shift would feel in practice if you stayed in the US?

• Is it worth cutting out private school for kids and just sending them to a public school? Plus side is it will shave off a big portion of expenses. Downside is concerns about hooligans in public schools and the lack of a strong bilingual curriculum that the private school offers.

I wouldn’t focus too much on “hooligans.” What matters more is the kind of experience you want for your kids and the type of social network you envision for your family.

• If absolutely needed, I could supplement the income by doing consulting work for US clients, but I kind of don't want to do that in FIRE and also do not want to incur the added complexity of French self employment tax filing

As a French resident, you’ll need to navigate French tax authorities no matter what.

• I could use a higher initial portfolio drawdown percentage but with us being so young and active with hobbies to explore and free time to do it in, we risk running out of money.

Would this concern feel any different if you stayed in the US instead of relocating?

• Right now my portfolio is largely unhedged for currency differences. I'm thinking about after the move gradually shifting over more of the IRA allocation into a world ex-US ETF.

Others here with more expertise might weigh in, but I agree the EUR/USD exchange rate adds a layer of risk. Buying instead of renting could also help reduce monthly expenses, which might mitigate some of this risk.

[mecht3ach]

This is perhaps a rather obvious question, but do you have EU citizenship rights to stay in France for longer than 90 days at a stretch? Or plans to get the proper visa (the Profession Liberale Visa, I would guess) by showing you meet those requirements? If it is the Profession Liberale Visa, you would need to show the financial wherewithal both at the beginning and after the first year for the renewal.

[langelgjm]

This is perhaps a rather obvious question, but do you have EU citizenship rights to stay in France for longer than 90 days at a stretch? Or plans to get the proper visa (the Profession Liberale Visa, I would guess) by showing you meet those requirements? If it is the Profession Liberale Visa, you would need to show the financial wherewithal both at the beginning and after the first year for the renewal.

For those who are not planning to work in the French economy, the visa de long séjour valant titre de séjour (VLS-TS) for a "private visit" gives you residence for a year and is renewable in one-year increments. The OP will have no trouble meeting the financial requirements. You also need to obtain private health insurance valid in the EU (US plans don't cut it) for the first year, and explain your living situation and motivation.

[TimoFrance]

We are a few years older than you; but are also planning a FIRE to France, but

I feel your budget is a bit is missing a few items:

Hobbies
Electronics, appliances, furniture, etc.
House Repairs
Cars - Payments, Fuel, Repairs
Clothing
Health Insurance (even in France everyone still buys a Mutuelle).

We are both dual nationals and are planning to move this summer.

Happy to touch base via PM.

[MagicMarker123]

Wow. Thank you everyone for the thoughtful responses.

If I understand your total asset allocation is 56.5% stocks and 43.5% bonds? That seems too conservative for a very early retiree. Very early retirees need to balance SORR with the risk of inflation over long (50 or 60 year) retirements, so generally need at least 70% stocks. Personally have been 80/20 for the past several years and have recently moved to 75/25 to mitigate SORR.

I mentioned that this is a tactical decision. It may come back to bite me in the butt (mostly in terms of missing out on gains rather than frank losses), but I am concerned with the high valuations in US stocks relative to historical norms, relative to risk free bond yields, and relative to international stocks. It has the 2007 and 1999 kind of feeling that I lived through. The Buffett Indicator, the historical returns relative to starting PE ratio, CAPE ratio, etc. all estimate zero to negative returns for the next 10 years, and significant underperformance vs bonds. It may be overly conservative, but I believe Morningstar ran a section once about a strategy of being heavy bonds in the early phases of retirement and ramping up the equities midway through. A back of the napkin target is for me to rebalance more into US stocks if we reach ~PE ratio of 16.

You may not want to immediately buy a house. We are landing in an AirBNB for a few months to scope out the rental/purchase market. SE France will be relatively expensive but $900k to $1.3 million is a lot of house. You could easily find something more modest and keep more funds invested.

Yeah we thought about that, but the research we did showed that we would be the least preferred kind of tenant for French landlords. We have non-French investment income (volatile). We don't have a CDI steady job. We also have so many assets we can buy a place outright (not long-term renters). Regarding AirBNBs, I thought many European cities have banned them. We're not opposed to renting in the short-medium term, but many people on other expat forums say "just buy" because of how agonizing and hard it is to find a rental. I agree that $900k-$1.3M is a lot of house, but that's the going price for a 3-4 BR apt in a good location (Cimiez, Port) close to the city center in Nice (per Sotheby and Le Figaro properties section).

We will be sending our school-age child to a private Catholic school "sous contrat" (state-subsidized). The tuition is EUR 50 (not a typo, that's fifty) a month. The curriculum is essentially identical to the public school curriculum, except with an hour or two extra each week for optional religious instruction. The teachers are trained and certified in the same way as the public system. By contrast "hors contrat" private schools are substantially more expensive and do not have to follow the national curriculum at all.

I'll look into it. Just FYI the place I looked up is EIB Nice Le Pain d'epices. The tuition for that is about $1000 per child per month, excluding summer vacation. I think that's a private school but not sure if it's sous or hors contrat.

My limited research suggests if you would be doing fully remote work for clients based in the US, payment is received to US accounts, and there is no nexus in France, it seems it really is a gray area whether this counts as self-employment in France.

The French accountant I talked to says that's only true if the work is performed on US soil. Remote work done in France I would actually need to self-incorporate to properly pay the social charges.

Also check out these threads on FIRE in France:

• Are capital gains tax exempt in France for a US Citizen? (Bogleheads)

• The Case for France as a Low-Tax FIRE destination (Reddit)

Yup, I actually read both of them before, and independently discovered the low tax nature of the tax treaty prior to that article which set in motion these FIRE plans years ago.

Your budget appears quite rough and incomplete. Health costs? Clothes? Maintenance?

Agreed, but those costs are lumpy and difficult to budget for. I want to go in with a large buffer under the misc section and then see how much our average spending in each of those categories will be.

Certainly go for public school. Hooligan concerns in French public school? Unless you are in the difficult areas (and w 1M+ house buying plan not likely), this is not a concern. French schools are generally more strict, disciplined and orderly than US - and many other - school systems. Also if this is a permanent move and kids are young, they need to learn French in school, otherwise they - and you - will stay isolated

Good point. My concern is that the kids won't learn English well. I really want them to be competently bilingual.

Remember taxes. There is a capital gains tax in France that you will be subjected to. Normally is is a flat 30pct tax (!), but you can opt for a progressive tax scheme. There is an example here how a 90k EUR capital gain means 10k taxes for your family size https://www.service-public.fr/particuli ... 19?lang=en

We would be exempt from this per the US-France tax treaty. All capital gains, dividends, pension payouts for US citizens are exempt from French tax and the social charges. We would only be paying the CSM/PUMA tax of 6.5% on passive income which is an acceptable tax that we can budget for.

Have you taken an extended stay in France before? Why this area? Are kids/spouse as excited? We have changed countries several times, incl France. Amazing adventure but also tough proceds

Yes! We've gone every year for the past 3 years to scope out various regions - Paris, Brittany, Alsace, Lyon, Bordeaux, Toulouse, Provence (Aix and Avignon), and Nice. We're deciding between Toulouse and Nice, with a slight lean towards Nice. Kids (2 and 4) are too young to understand the implications of a move like that. Spouse is excited. We've both lived abroad before in Asia and Europe so we think we can adjust well.

I speak somewhere between A2 and B1 level French. It's not been a problem on our trips there as tourists, but I budgeted for 1 year of intensive classes for both of us when we hit the ground.

You will still owe some taxes or other charges like the cotisation subsidiaire maladie (CSM) after you join the public health system.

Yes, am aware of this. 6.5% on passive income above the PASS unless we generate some local taxable income. Still a bargain compared to US.

Welcome to the forum.

How do you think this mental shift would feel in practice if you stayed in the US?

Thanks. I think we'd be more stressed. For comparison, FIRE in most US cities would be even more difficult for us. Our current big expenses in a VHCOL coastal city are $4000 rent, $2400 daycare per child, $1800 groceries, $450 car, $200 insurance, $500 utilities. That would way exceed the income that our investments can generate. And we'd have to pay for our own health insurance which I estimated for our family to be $2300/mo for a silver plan.

As a French resident, you’ll need to navigate French tax authorities no matter what.

Sorry if I wasn't clear. Yes I would still declare but tax filing would be quite simple if I don't generate French source income. Everything goes into the section "Credit d'impôt égal à l'impôt français" which zeroes out all our French tax owed minus the CSM. After that it just becomes an exercise in optimizing US taxes. From the accountant I talked to if I do remote work in France I would have to self-incorporate to properly pay the social charges.

Would this concern feel any different if you stayed in the US instead of relocating?

Yes, see above. We are already quite stressed just living day to day given high expenses in US. FIRE here would be very difficult given high housing, high health care costs, and car dependent nature of most cities.

This is perhaps a rather obvious question, but do you have EU citizenship rights to stay in France for longer than 90 days at a stretch? Or plans to get the proper visa (the Profession Liberale Visa, I would guess) by showing you meet those requirements? If it is the Profession Liberale Visa, you would need to show the financial wherewithal both at the beginning and after the first year for the renewal.

Yes, spouse is an EU citizen (non-France) so I can tag along on a spousal reunification permit easily.

I feel your budget is a bit is missing a few items:

Hobbies
Electronics, appliances, furniture, etc.
House Repairs
Cars - Payments, Fuel, Repairs
Clothing
Health Insurance (even in France everyone still buys a Mutuelle).

We are both dual nationals and are planning to move this summer.

Happy to touch base via PM.

Thanks. We don't plan to have a car. Part of the appeal of living in a French city close to the core is giving up the car dependent nature of life in the US, which is a big QOL boost. Other things like appliances, house repairs, clothing are lumpy and difficult to budget for. I plan to fit them into the misc section. Hopefully it still leaves us enough income to travel, eat out, and do some hobbies.

I don't plan on getting a mutuelle. Is it required? My understanding is that the state insurance covers 70% of medical costs. We actually want to leave some out of pocket spending that we can draw down our HSA for. That's ideal from a tax optimization standpoint.

[langelgjm]

You may not want to immediately buy a house. We are landing in an AirBNB for a few months to scope out the rental/purchase market. SE France will be relatively expensive but $900k to $1.3 million is a lot of house. You could easily find something more modest and keep more funds invested.

Yeah we thought about that, but the research we did showed that we would be the least preferred kind of tenant for French landlords. We have non-French investment income (volatile). We don't have a CDI steady job. We also have so many assets we can buy a place outright (not long-term renters). Regarding AirBNBs, I thought many European cities have banned them. We're not opposed to renting in the short-medium term, but many people on other expat forums say "just buy" because of how agonizing and hard it is to find a rental. I agree that $900k-$1.3M is a lot of house, but that's the going price for a 3-4 BR apt in a good location (Cimiez, Port) close to the city center in Nice (per Sotheby and Le Figaro properties section).

We were able to find a 3 month AirBNB rental without much issue. I don't think any French city has banned AirBNB, though Paris imposes some restrictions. Even when cities do "ban" them they often prohibit only short term rentals (less than 30 days).

We are hoping to rent and maybe we will encounter difficulty in finding a willing landlord, but many expat forums are full of people in hot/tight property markets like Paris so their experiences are not necessarily reflective of the rest of France. It is also possible to pay for a renter's guarantor.

I'll look into it. Just FYI the place I looked up is EIB Nice Le Pain d'epices. The tuition for that is about $1000 per child per month, excluding summer vacation. I think that's a private school but not sure if it's sous or hors contrat.

It is hors contrat - price alone tells you, but I also looked it up here.

My limited research suggests if you would be doing fully remote work for clients based in the US, payment is received to US accounts, and there is no nexus in France, it seems it really is a gray area whether this counts as self-employment in France.

The French accountant I talked to says that's only true if the work is performed on US soil. Remote work done in France I would actually need to self-incorporate to properly pay the social charges.

I haven't thought too much about it. But one benefit is that if you are paying the self-employment taxes and social charges, I think you then wouldn't owe the CSM.

I don't plan on getting a mutuelle. Is it required? My understanding is that the state insurance covers 70% of medical costs. We actually want to leave some out of pocket spending that we can draw down our HSA for. That's ideal from a tax optimization standpoint.

Getting a mutuelle is not required, but most working people will have one through their employer so it's just considered normal. I think French are also used to the idea of not paying out of pocket for healthcare. That said for non-working people with large amounts in HSAs I think you can easily self-insure for the 30% not covered by the public health system, especially since costs are covered at 100% for long-term hospitalization after 30 days. Though if you plan to use private doctors/hospitals who charge above the standard reimbursement rate you may have more out of pocket costs.

[jg12345]

Hi OP
two short points:
- this is mainly a blog about investments, there are others more focused on FIRE (mr money moustache)


If absolutely needed, I could supplement the income by doing consulting work for US clients, but I kind of don't want to do that in FIRE and also do not want to incur the added complexity of French self employment tax filing.

=> I would expect that self employment tax filing will be done by someone else for a small fee. so I would not worry about that. it is good to know that you can do consulting in case something goes south

I could use a higher initial portfolio drawdown percentage but with us being so young and active with hobbies to explore and free time to do it in, we risk running out of money.

=> this point can only be answered with proper modeling. you could do that yourself on excel, or use cFiresim, or similar. on boglewiki there's a full list of retirement calculators.


Right now my portfolio is largely unhedged for currency differences. I'm thinking about after the move gradually shifting over more of the IRA allocation into a world ex-US ETF.

=> I would keep the stock allocation as FTSE all-world or MSCI ACWI or equivalent. I would perhaps hedge the bonds to EUR (unsure if you have non-EUR bonds at all tbh, although you call them 'treasury bonds' so it's probably US). you are not asking, but I would ditch the entire single stock investments for a FTSE all-world or MSCI ACWI or equivalent

[SouthernInvestor]

You picked the right country tax wise.

You are planning for your kids to attend university in France? If yes, I think local school option ja smart.

France is pretty cheap outside of Paris. I think you’ll do just fine.

[Valuethinker]

You picked the right country tax wise.

You are planning for your kids to attend university in France? If yes, I think local school option ja smart.

France is pretty cheap outside of Paris. I think you’ll do just fine.

One problem.

French school instruction in the English language is problematic (I have heard from friends). The problem is you need the French teacher's certificate. And like everything in France around certification, that is highly protectionist.

Thus, the kids are not taught English by native English speakers. I had a partner who was an English teacher, she had lived in France for 2 years (having studied French in university). But she couldn't get a look into teaching in a French school.

So the kids basically are handicapped in learning English. Whether that matters in a household where English is the first language, I don't know. But I wouldn't want to handicap my kids with what is the world's lingua franca - the advantages of total fluency.

(This one has a personal resonance for me. My mother (in the 1930s & 40s) was taught French by teachers who did not speak French. As a result, her pronunciation was always diabolical: she would say "un" as unnh and "rien" as "ree-ennn". Just couldn't get her mouth around the basic French pronunciations, she always sounded like she was reading French words out of a book, in a North American accent).

Now all of the above is anecdotal and one can certainly check it against people with a more informed view.

[jerome-mo]

1500/mo seems high on groceries for a family of four, groceries are generally less expensive in France than in the U.S.

Your property taxes estimate may be optimistic. Did you check how much “taxe foncière” will be due yearly for a 1M property in your area (Nice)? I would ask a real estate agency if you haven’t yet. To that tax you need to add “charges” for garbage disposal, as well as funding for repairs and maintenance (applicable if you buy a flat as your become responsible of a % of the building, similar to an HOA). This is very dependent on the city and the building, but for example, I have a property in a coastal city of Var département, not far from Nice, worth a lot less than that and my monthly tax + HOA expenses are about 200/mo for a good year. You don’t really have to worry about it if you rent.

You can consider re-allocating some of your French language lessons to your children. This would help them integrate, especially when they’ll enter middle school and high school.